UAE to implement 5 per cent VAT from January 2018 to Business and Landlords

Business owners and landlords must pay a five per cent value-added tax (VAT) starting January 2018, announced the Federal National Council (FNC) on Wednesday in the UAE capital.

The FNC approved the draft law, which serves as a legal framework and organises all the regulations of taxes, which aims to generate revenue for the federal government and enabling a sustainable economic growth.

Private businesses making Dh370,000 and more a year will have to pay VAT. The tax is binding on landlords renting out properties as well, which could mean a rise in rents for tenants across the UAE.

There are currently more than 450,000 private owned companies in the UAE, and the number is expected to soon reach 600,000, which will see a growth in the annual GDP, said Obaid Humaid Al Tayer, the Minister of State for Financial Affairs.

Last year, the GCC countries, including the UAE, Saudi Arabia, Qatar, Bahrain and Oman, signed an agreement to implement a VAT of five per cent.

Al Tayer said the law will be implemented in the UAE on January 1, 2018. However, all GCC members have until January 1, 2019, to implement the rule.

"VAT is the only law that is currently on the legislative committee, as well as the selective items tax on tobacco, fizzy drinks and energy drinks."

The minister said the effect of the VAT on people in general, including residents and consumers, will start with 1.3 percent and will drop with time, whereas businesses will face 0.06 percent, and 0.04 on gross domestic product (GDP) growth when implemented.The law will also provide the authority measures to address procedures for tax collectors, tax auditing, tax avoidance, violations and the penalties.

The passed draft law also stipulates that fines for those avoiding the pay their taxes should not exceed five times the value of the evaded tax.

The minister said that by 2021 the aim is to generate 80 per cent of UAE's economy by non-oil sectors, while the remaining 20 percent generated by oil, as opposed to the current 80 percent GDP.

Selective items tax

The GCC countries also agreed to introduce 'selective items tax', including on tobacco, soft drinks and energy drinks.

The cap for the 'selected items tax' is 100 per cent, in which Saudi Arabia has already drafted its law and placed a 100 percent tax on tobacco while placing 35 percent on soft drinks.

Although the UAE's Ministry of Finance has yet to confirm the amount of tax implemented on its selected items, Al Tayer said it is expected to be applied this year.

"The cap is 100 percent, it could be less depending on each country," said Al Tayer.

"Once the law is issued, it will say when it will be implemented," he added.

The revenue generated from tobacco products alone is expected to reach Dh2 billion a year.

Independent Execution Court established in Dubai

Dubai Courts have announced the establishment of an independent Execution Court to improve the efficiency of the judicial system, it was announced on Tuesday.

The establishment comes under Resolution No (8) of 2016 issued by Shaikh Maktoum Bin Mohammad Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Chairman of Dubai Judicial Council.

Under the resolution, Judge Abdullah Ahmad Ali Al Kaitoob is appointed the head of the new Execution Court which serves as a significant addition to existing specialised courts which include the Civil, Labour, Real Estate, Commercial, Criminal and Personal Status courts.

The move comes in response to the growing need for an independent court to address the increasing number of execution cases.

Tarish Eid Al Mansouri, director general of Dubai Courts, explained that the introduction of the Execution Court is significant for the development of the judicial industry as it serves as a cornerstone for enhancing the UAE’s position in the World Bank’s annual Global Competitiveness Report by expediting verdicts on execution cases.

He said that this move lays a solid foundation for improving execution durations which is one of the main challenges in contract execution and an issue that made Dubai Courts rank 144th in the 2015 Report.

He emphasised that a specialised court for executions will play a pivotal role in achieving the ambitious vision of creating “pioneering and internationally distinguished courts” capable of completing cases swiftly. He added that the move will positively impact local and global confidence in the legal and judicial system.

“We seek to activate the institutional role of the Execution Court through the development of an independent strategic plan that is closely linked to the goals of the Strategic Document 2016-2019 which ensures that justice is served accurately and swiftly, providing easy access to judicial services and upholding the values of justice, independence, transparency and innovation,” he said.

“We welcome the establishment of the Execution Court which will help measure the strategic performance indicators of execution cases included in the Strategic Document 2016-2019 accurately and efficiently. It will help us sustain our success in strengthening the judicial system based on the pillars of neutrality, impartiality, transparency, justice and equality to consolidate the global leadership of Dubai.”

The establishment of the Execution Court paves the way for the development of an independent strategy for execution cases, similar to other specialised courts of the first instance, that preserves the influential role of managing execution cases in a manner that embodies Dubai Courts’ goal of effectively dispensing justice. The new court will adhere to a comprehensive operational plan that includes various quality initiatives and programmes for improving the implementation of provisions

UAE Penal Code to replace jail terms for minor offenses with community service

Changes have been introduced to the UAE Penal Code to replace jail terms for minor offenses with community service, according to a new law.

Community payback such as cleaning the streets, schools or other voluntary work will be determined in a decision by the Minister of Justice, in agreement with the ministers of Interior and Emiratisation and Human Resources, according to the new law issued by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan last month.

Community service of up to three months will replace punishment for minor offences that would have otherwise been punishable by not more than six months or a fine, states the new law which will take effect from next month. Public prosecutors will oversee implementation of the community service and receive reports on the offenders’ performance.

The court, on recommendation from prosecutors, may order a jail term similar to the community service period if the offenders fail to discharge their duties during the community payback period.

In 2009, the Cabinet approved the federal law of alternative punishments which lists 20 offences that call for community service ranging between 20 to 240 hours.By applying the new code, the UAE will be the first among Arab countries to adopt such a type of law.

Legal experts said the move towards restorative justice or alternative sentencing means that some offenders avoid imprisonment with its many unwanted consequences. They deem it beneficial for society, as it may prevent them from getting into the so-called revolving door syndrome, the inability of a person to get back to normal life after leaving prison, becoming a career criminal. Furthermore, experts say, there are hopes that this could alleviate prison overcrowding and reduce the cost of punishment.

The community service may include unpaid work or community payback, house arrest, curfew, mandatory treatments and programmes (drug or alcohol treatment, psychological help and regular reporting to an official).Meanwhile, the new law provides for tougher penalties for crimes committed in a state of war and acts of terror.

• Under the law, a citizen who joins in any way the armed forces or security institutions of an enemy in a state of war with the UAE will face execution.
• The capital punishment will also be handed down to those who commit any crime to undermine the sovereignty, independence and integrity of the nation.
• Deliberately acting against a foreign country with a purpose to harm diplomatic relations of the country or endanger its citizens, employees, money or interests, will be punishable with a life sentence.
• Insulting the president of the UAE will carry a jail term ranging between 15 and 25 years and a fine, according to the new law.

• Capital punishment or life sentence will be handed down to those who set up, run or join any organisation, group or gang plotting to overthrow the government and seize power in the UAE. Promoting these organisations verbally, in writing or by any other means, will carry a jail term ranging between 15 and 25 years.
• Abusing religion to entice sedition verbally, in writing or by any other means, will carry a jail term of not less than 10 years.

National icons

Insulting the UAE, its flag, national logo, leadership or institutions will carry a jail term ranging between 10 and 25 years and a fine of at least Dh500,000.

Publishing false news, statements or rumours with a purpose of terrifying the people or harming public interest will carry a jail term of at least one year.

Making, importing, exporting or possessing pornographic material will carry a prison term of up to three years or a fine of at least Dh5,000 or both.

Gambling
Gambling will be punishable by a prison term of up to two years or a fine of up to Dh50,000. The penalty will be stiffened to three years in jail and a fine if the crime is committed in public or a place designed for gambling.

Prostitution and abuse

Those who set up or run a brothel for prostitution will be penalised by a prison term and a fine of at least Dh100,000.

The law makes it a criminal offence to swear or use abusive language against a person, punishable by a prison term of up to a year or a fine of up to Dh10,000. The penalty will be increased to up to two years in jail or a fine of up to Dh20,000 or both if the swearing was against a public officer. Publishing of swearing or use of abusive language will toughen the penalty, according to the law.

• Torturing, mistreating or failing to provide due care to a pet will carry a fine of up to Dh5,000.
• Trespassing will be punishable by a jail term of up to one year or a fine of up to Dh5,000.
• Failing to pay the bill for your hotel stay, a rental car, or dine and dash without paying in a restaurant will be punishable by a prison term of up to six months, or a fine of up to Dh5,000 or both.

U.A.E amended Federal Law to control Cyber Crimes

Sheikh Khalifa issued Federal Law No. 12/2016 amending Federal Law No. 5/2012 on combating information technology crimes.

Article 1 provides for replacing the text of Article 9 of Federal Law No. 9/2012 as follows:

Whoever uses a fraudulent computer network protocol address (IP address) by using a false address or a third-party address by any other means for the purpose of committing a crime or preventing its discovery, shall be punished by temporary imprisonment and a fine of no less than Dh500,000 and not exceeding Dh2,000,000, or either of these two penalties.

Article 2 of the law states that the law shall be published in the Official ‘Gazette’ and shall come into effect the day following publication.

Ministry of Foreign Affairs

Federal Law No. 10/2016 amends some of the provisions of Federal Law No. 45/1992 on regulating the work of the Ministry of Foreign Affairs.

The first article of the law, published in the latest issue of the Official ‘Gazette’, changes the text of Clause 10 of Article 2 of Federal Law No. 45/1992 and replaces it with the following text:

Issuance and renewal of diplomatic and special passports for nationals of the state as well as service passports. Specifying the eligible groups (of people) and rules for issuing these passports as an exception from the provisions of Federal Law No. 17/1972 on naturalisation and passports and amendments. A diplomatic or special passport is given to groups of people, who are not specified in the previous clause, excluding their families, and by virtue of a decision made by the President or the Vice-President of the State, based on a proposal from the Foreign Minister.

Article 2 states that each and any provision that contradicts the provisions of this law shall be abolished.

Article 3 provides for the publication of this law in the Official Gazette and that it will come into effect the day after publication.

National Media Council 

Sheikh Khalifa also issued Federal Law No. 11/ 2016 regulating the competencies of the National Media Council. 

According to the law, the National Media Council is the federal government body established to oversee and undertake the media affairs of the United Arab Emirates. It has corporate character, an independent budget and the legal capacity required to undertake all activities to ensure achievement of its goals. It is a government body affiliated with the Cabinet and shall have its seat in Abu Dhabi City. The Council may set up branches and offices inside and outside the UAE.

Article 4 of the law states the objectives of the NMC and accordingly it shall develop the UAE's media policy, draft media legislation and ensure its execution and co-ordinate the media policy between the emirates, in line with the UAE's domestic and foreign policy to ensure support for the Federation of the UAE and project national unity.

Article 5 states the NMC's scope of jurisdiction which includes the following:

Developing and executing the required policies and plans to develop the media sector; proposing bills and regulations relating to the work of the Council in coordination with the relevant authorities in the country; proposing regulations, standards and foundations required for licensing and accrediting media outlets and their staff and activities, including e-publishing; issuing rules and regulations that ensure the achievement of the Council's goals in line with the controls it specifies; coordinating with the authorities of media free zones on developing an organisational framework to regulate the Council's relationship with these zones; representing the UAE at media meetings, events and activities in and outside the UAE; undertaking any other relevant responsibilities specified by the Cabinet's regulations and resolutions.

Article 6 states that a Board of Directors, formed by virtue of a decision issued by the Cabinet, shall run the Council.

Article 7 states that the Board of Directors is the supreme authority of the Council and shall accordingly exercise all its powers and the required authority. It may develop the Council's general policy, propose amendments to the required plans and follow up the plans for their execution, propose draft regulations pertaining to the work and competencies of the Council as well as to the achievement of its objectives and submitting the same to the Cabinet for approval as well as the preparing of a draft organisational structure for the Council, specifying the responsibilities and competencies and departments of the Council, and submit the same to the Cabinet for approval, propose a draft annual budget for the Council and a draft annual closing account in addition to any other competencies delegated to the Board by the laws, regulations and resolutions issued by the Cabinet. The Board may also delegate some of its competencies to its Chairman.

According to the law, the Chairman of the National Media Council is responsible for overseeing the management of the Council for all aspects in line with the provisions of the Council's effective regulations. The Council shall have a director general, to be appointed by virtue of a federal law based on a proposal from the Chairman, who will be the legal representative of the Council. The Board of Directors shall issue a decision specifying the Chairman's competencies and jurisdiction.

Article 10, a clause about the standards and regulations issued by the Council, states that media organisations in the state must comply with the regulations and rules issued by the Council, as well as commit themselves to provide information and data required by the Council to achieve its objectives.

Article 11 states that the fiscal year of the Council shall start on the 1st of January and ends on the 31st of December every year.

According to the law, regulations and decisions which are effective in the National Media Council shall remain enforced at the time of issuance of the law without conflict with its provisions.

The law shall be published in the Official ‘Gazette’ and will come into effect the day following publication.